EX-99.1 2 c87260exv99w1.txt EARNINGS RELEASE EXHIBIT 99.1 (INSITUFORM-TECH)(INSU) Insituform Technologies, Inc. Reports $0.12 Earnings Per Share for Second Quarter 2004; Revenues Increase 14% Chesterfield, MO - July 29, 2004 - Insituform Technologies, Inc. (Nasdaq National Market: INSU) (the "Company") today reported second quarter 2004 earnings of $3.2 million, or $0.12 per diluted share, compared to $4.6 million, or $0.17 per diluted share, for the same period last year. Revenues increased 14.1% to $142.4 million for the second quarter of 2004 from $124.8 million in the same period last year. This reflects the impact of acquisitions made after the second quarter of 2003 as well as growth in the following areas: three North American CIPP regions, Europe, the Tite Liner(R) segment, and tunneling. Year-to-date revenues increased 9.0% to $270.3 million from $248.1 million in the same period last year. As with second quarter revenues, the effect of acquisitions and growth in the same markets impacted these results. Year-to-date earnings were $3.7 million, or $0.14 per diluted share, in 2004 compared to $11.2 million, or $0.42 per diluted share, in the first half of 2003. The Company's President and Chief Executive Officer, Thomas S. Rooney, Jr., commented: "While our earnings are below year-ago levels, they are significantly better than the $0.02 per diluted share earned in the first quarter. Backlog growth in late 2003 is beginning to benefit the Company's revenues, and we continue to see modest growth in CIPP orders and strong growth in tunneling orders." Rooney also noted, "Another important factor is that we've expanded the number of crews working on our North American CIPP projects from 59 in June of last year to 70 at the end of this quarter. The crew buildup was undertaken to respond to our customers' demands in the marketplace." Gross profit increased 4.4% to $30.6 million in the second quarter of 2004 from $29.3 million in the second quarter of 2003; however, gross profit margin declined from 23.5% to 21.5%. For the first half of 2004, gross profit decreased 2.8% to $55.9 million from $57.5 million for the same period in 2003. Gross profit declines in three North American CIPP regions are driving this trend. Lower volume and pricing - a result of the intense competitive environment - in these three CIPP regions as well as increased tunneling volume, and pipebursting work, both of which carry lower margins than CIPP, combined to negatively impact gross profit. Second quarter 2004 operating expenses increased 21.0% to $23.0 million from $19.0 million in the second quarter of 2003. For the first half of 2004, operating expenses increased 24.7% to $45.0 million from $36.1 million for the same period last year. These increases were attributable to additional compensation and employee-related costs along with professional and consulting fees. These higher costs reflect the Company's key strategic initiatives, notably investment in sales and logistics enhancement. Acquisitions made in 2003 added $1.2 million and $2.5 million, respectively, to the second quarter and first half of 2004. Interest and other expense was $2.2 million in the second quarter of 2004, compared to $2.4 million in the second quarter of 2003. Year to date, interest and other expense increased 44.0% to $4.5 million from $3.1 million a year ago, which reflects the placement of $65.0 million in Senior Notes in April 2003, causing higher interest expense during the first six months of 2004 compared to the same period of 2003. The Company's unrestricted cash position remains strong at $89.8 million at June 30, 2004 compared to $93.9 million at December 31, 2003. Importantly, this is after the Company made $15.8 million in debt repayments and $16.6 million in capital expenditures during the six-month period ended June 30, 2004. Capital expenditures in the first half of 2003 were $5.7 million. Despite debt amortization and significant capital expenditures, a renewed focus on cash collections and receivables management, $2.9 million received from the exercise of stock options, and $9.1 million in tax refunds received earlier this year have contributed to the Company's strong cash position. Mr. Rooney concluded, "As we expected a quarter ago, our second quarter results well exceeded the first quarter's performance. We continue to see robust bidding activity, and our backlog continues to grow. Again, I emphasize that the strategic investments that we have been talking about for the last few quarters are not expected to provide visible benefit until 2005. But these initiatives are designed to help the Company achieve operational excellence, competitive advantages, technological innovation, and business growth." The Company will host a conference call at 9:30 a.m. EDT on Friday, June 30. The call can be accessed by clicking on the Presentations tab on the Investor Relations page of the Company's Web site (www.insituform.com) or by using the following link: http://www.shareholder.com/insituform/MediaList.com. An audio archive of the webcast will be available approximately two hours after the call through www.insituform.com. The archive will be available for one week. Insituform Technologies, Inc. is a leading worldwide provider of proprietary technologies and services for rehabilitating sewer, water and other underground piping systems without digging and disruption. More information about the Company can be found on its Internet site at www.insituform.com. This news release contains forward-looking statements, which are inherently subject to risks and uncertainties that could cause actual results to differ materially from those projected. Factors which could affect results include, among others, the competitive environment for the Company's products and services, the geographical distribution and mix of the Company's work, and other factors set forth in reports and documents filed by the Company with the Securities and Exchange Commission from time to time. The Company does not assume a duty to update forward-looking statements. Please use caution and do not place reliance on forward-looking statements. INSITUFORM TECHNOLOGIES, INC. CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (In thousands, except per share amounts)
For the Three Months For the Six Months Ended June 30, Ended June 30, 2004 2003 2004 2003 Revenues $ 142,434 $ 124,778 $ 270,348 $ 248,126 Cost of revenues 111,870 95,511 214,417 190,590 Gross profit 30,564 29,267 55,931 57,536 Selling, general and administrative 22,974 18,982 44,966 36,065 Operating income 7,590 10,285 10,965 21,471 Other (expense) income: Interest expense (2,627) (2,175) (4,795) (3,372) Other 451 (189) 287 242 Total other expense (2,176) (2,364) (4,508) (3,130) Income before taxes on income 5,414 7,921 6,457 18,341 Taxes on income 2,238 3,089 2,663 7,153 Income before minority interests, equity in earnings and discontinued operations 3,176 4,832 3,794 11,188 Minority interests (45) (30) (101) (60) Equity in earnings of affiliated companies 25 75 (35) 100 Income from continuing operations 3,156 4,877 3,658 11,228 Loss from discontinued operations -- (292) -- (16) Net income $ 3,156 $ 4,585 $ 3,658 $ 11,212 Earnings per share: Basic: Income from continuing operations $ 0.12 $ 0.18 $ 0.14 $ 0.42 Loss from discontinued operations -- (0.01) -- -- Net income $ 0.12 $ 0.17 $ 0.14 $ 0.42 Diluted: Income from continuing operations $ 0.12 $ 0.18 $ 0.14 $ 0.42 Loss from discontinued operations -- (0.01) -- -- Net income $ 0.12 $ 0.17 $ 0.14 $ 0.42 Weighted average common shares - basic 26,685 26,445 26,587 26,487 Weighted average common and equivalent shares - diluted 26,782 26,548 26,718 26,574
SEGMENT DATA Revenues Rehabilitation $ 104,625 $ 93,883 $ 200,254 $ 186,250 Tunneling 31,145 26,385 57,195 51,970 Tite Liner(R) 6,664 4,510 12,899 9,906 Total revenues $ 142,434 $ 124,778 $ 270,348 $ 248,126 Gross profit Rehabilitation $ 24,757 $ 25,004 $ 45,062 $ 48,472 Tunneling 3,437 2,773 6,383 5,934 Tite Liner(R) 2,370 1,490 4,486 3,130 Total gross profit $ 30,564 $ 29,267 $ 55,931 $ 57,536 Operating income Rehabilitation $ 5,364 $ 8,589 $ 7,091 $ 17,403 Tunneling 835 976 1,331 2,417 Tite Liner(R) 1,391 720 2,543 1,651 Total operating income $ 7,590 $ 10,285 $ 10,965 $ 21,471
INSITUFORM TECHNOLOGIES, INC. CONSOLIDATED CONDENSED BALANCE SHEETS (Unaudited) (In thousands)
June 30, 2004 December 31, 2003 ASSETS CURRENT ASSETS Cash and cash equivalents $ 89,828 $ 93,865 Restricted cash 1,343 6,126 Receivables, net 88,491 90,814 Retainage 25,135 24,902 Costs and estimated earnings in excess of billings 38,400 27,853 Inventories 15,127 12,935 Prepaid expenses and other assets 8,722 19,515 Assets held for disposal -- 1,263 TOTAL CURRENT ASSETS 267,046 277,273 PROPERTY, PLANT AND EQUIPMENT, less accumulated depreciation 83,696 75,667 OTHER ASSETS Goodwill 131,577 131,613 Other assets 23,546 23,807 TOTAL OTHER ASSETS 155,123 155,420 TOTAL ASSETS $505,865 $508,360 LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Current maturities of long-term debt and line of credit $ 16,859 $ 16,938 Accounts payable and accrued expenses 88,880 82,670 Billings in excess of costs and estimated earnings 8,663 8,495 Liabilities related to discontinued operations -- 1,770 TOTAL CURRENT LIABILITIES 114,402 109,873 LONG-TERM DEBT, less current maturities 98,510 114,323 OTHER LIABILITIES 3,361 3,530 TOTAL LIABILITIES 216,273 227,726 MINORITY INTERESTS 1,578 1,465 TOTAL STOCKHOLDERS' EQUITY 288,014 279,169 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $505,865 $508,360
INSITUFORM TECHNOLOGIES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (In thousands)
For the Six Months Ended June 30, 2004 2003 Cash flows from operating activities: Net income $ 3,658 $ 11,212 Income from discontinued operations -- 16 Income from continuing operations 3,658 11,228 Adjustments to reconcile to net cash provided (used) by operating activities: Depreciation 8,164 7,247 Amortization 1,190 653 Deferred income taxes 35 (20) Write-off of debt issuance costs 226 -- Change in restricted cash related to operating activities 181 672 Other 2,412 1,510 Changes in operating assets and liabilities, net of purchased businesses: Receivables, including costs and estimated earnings in excess of billings (7,612) 6,690 Inventories (2,192) (63) Prepaid expenses and other assets 11,077 341 Accounts payable and accrued expenses 4,608 1,574 Net cash provided by operating activities of continuing operations 21,747 29,832 Net cash provided (used) by operating activities of discontinued operations -- (1,299) Net cash provided by operating activities 21,747 28,533 Cash flows from investing activities: Capital expenditures (16,598) (5,734) Proceeds from sale of fixed assets 473 349 Purchase of business, net of cash acquired -- (300) Other investing activities -- 1,089 Net cash used in investing activities (16,125) (4,596) Cash flows from financing activities: Proceeds from issuance of common stock 2,913 185 Purchases of treasury stock -- (1,417) Principal payments on long-term debt (15,813) (19,271) Issuance of long-term debt -- 65,000 Increase (decrease) in line of credit -- (25,778) Deferred financing charges (633) (692) Change in restricted cash related to financing activities 4,602 -- Net cash used in financing activities (8,931) 18,027 Effect of exchange rate changes on cash (728) 874
Net increase (decrease) in cash and cash equivalents for the period (4,037) 42,838 Cash and cash equivalents, beginning of period 93,865 71,401 Cash and cash equivalents, end of period 89,828 114,239
CONTACT: Insituform Technologies, Inc. Christian G. Farman, Vice President and CFO (636) 530-8000